Sensex slumped 839.91 pts in single day

February 3, 2018

The benchmark index of Bombay Stock Exchange (BSE), after slumping by whopping 900 points in a single session to hit the day’s low of 35,006.41 during the day, tumbled on Friday by 839.91 points in late trade to end at a two-week-low of 35,066.75, as introduction of long-term capital gains tax in the Union Budget disappointed investors.

Even bonds slid for the second consecutive session on worries that the Reserve Bank of India would become more hawkish on inflation. The Nifty of National Stock Exchange (NSE) too sank by 256.30 points below 11K-level to 10,760.60.

The introduction of the long-feared long-term capital gains (LTCG) tax on stocks roiled investors. Investors were also miffed as the fiscal deficit target for FY-2018 was extended to 3.5 per cent of GDP in the Budget, from 3.2 per cent pegged earlier. Negative cues from global markets also spoiled sentiment.

The weak sentiment came a day after the government unveiled the budget for the year starting in April that raised spending for rural sectors and healthcare, widening the fiscal deficit target to 3.3 per cent of gross domestic product from the previous 3.0 pc.

The government also unveiled a 10 pc tax on long-term capital gains in equity markets. The government’s move to raise minimum support prices for crops could lead to higher retail prices at a time when consumer price inflation has already hit a 17-month high of 5.21 pc, well above the RBI’s target of 4 pc.

The equity market remained under pressure for the fourth straight session today, as Sensex fell by 199 points to 35,707.60 in early trade. It remained in red only throughout the day. During the day it lost by whopping 900 points to 35,006.41 day’s low, before closing at 35,066.75, sliding by 839.91 points as compared to its previous
close.

The Nifty recorded day’s high and low at 10,954.95 and 10,736.10 points, respectively. Among the sectoral indices, Realty was the worst hit down by more than six per cent, while Materials, Energy, Finance, Auto and Capital Goods fell by more than three pc each, brokers said. Scrips of Bajaj Auto, Bharti Airtel, Axis Bank, M&M and Reliance
Industries tumbled, however, TCS, Hindustan Unilever and Wipro managed to end in green.

The broader market depicted weakness. The BSE Mid-Cap index slumped 4.07 pc, while the Small-Cap index lost 4.52 pc. Both these indices sharply underperformed the Sensex.
The market breadth was quite weaker on BSE, as 2,525 shares declined against 312 advanced and 125 were unchanged.

The total turnover on BSE amounted to Rs 5,933.21 crore, compared with a turnover of Rs 5,829.43 crore registered during the previous trading session. US shares ended mostly lower on Thursday as fears of a pick up in inflation and rising bond yields spoiled sentiment.